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Profit-led Inflation in Aotearoa

A combined report from NZCTU, FIRST Union, and ActionStation

This report, co-authored by the NZCTU, FIRST Union, and ActionStation, shows that rising profits, not wages, have been the primary driver of domestic inflation in Aotearoa New Zealand over the past two years. From mid-2021 to the end of 2022, rising profits contributed more than half of domestic inflationary pressure, while labour costs accounted for less than a third.  

The report decomposes the profit and labour contributions to domestic inflationary pressure and uses sector- and firm-level data to examine how rising profits have fed into the cost of food, transport, and housing.  

These findings should open up new discussions about the appropriate way to manage inflation. We need to tackle inflation in both the short and the long run, and to make sure that the costs of our inflation response fall on those who have benefitted the most over the past few years.  

In the long term, inflation reduction requires investment in those things that will make a consistent difference. We need to tackle rents, energy, and transport costs, and to make sure that Kiwis have access to high quality public services.